Bank Accounts

There are tremendous reasons in holding a portion of your savings at a safe, stable bank out of your home town:

1.    Many foreign banks are much healthier than their Western counterparts who usually have razor-thin capital and tight liquidity.

2.    Foreign banks typically make it easier for you to diversify your currency exposure, so that you don’t bet your whole savings on a shaky fiat currency that can be devalued overnight.

3.   Foreign banks are further from your home government’s reach. Capital controls, exchange controls, asset freezes etc. become irrelevant when you bank in a safe foreign jurisdiction.

Problem is, it's becoming increasingly difficult to open a foreign bank account in many top jurisdictions.  Bankrupt Western governments led by the United States have embarked on a global witch hunt to treat foreign banks (and their customers) like criminal terrorists.  Legislation like FATCA (Foreign Account Tax Compliance Act) and globally coordinated information sharing agreements have scared banks so much that they’re now very reluctant to open accounts for non-residents.  Taking on foreign clients used to mean extra business. Now it just means extra risk, not to mention a massive regulatory headache as well.

For expats with budding business idea, incorporation in Hong Kong is quick and easy and it has  traditionally been one of the best and easiest jurisdictions to bank, is starting to close its doors to non-resident bank customers.  You’re probably fed by desperate posts and comments about abrupt and rejection by big names in the city e.g. HSBC, Standard Chartered Bank.

No Pain No Gain

Why does Hong Kong earn its name as international financial hub? Our city is characterized by freedom of doing business, robust regulatory on financial system, effective currency peg of Hong Kong Dollar to US Dollar, and the low and simple tax regime.

Doing a quick online searching, you can find out the success of Hong Kong is highly relying on its reputation as the worldwide financial center with stable Hong Kong Dollar and regulation on financial institutions.

Hong Kong is not a jurisdiction whose economy is solely depending on offshore financial services, Hong Kong is a city for doing business. You may find the hardship during your initial stage of Hong Kong business, but you should not retreat.

As having bank accounts in Hong Kong now give more confidence to your all counterparts, seek help from experts, tune up your challenges.

Know-You-Client (KYC) is a Chicken-Egg Problem

No matter which banks in Hong Kong you have approached for account opening, the bankers are responsible to know all the details of your business as well as the owners. It’s because the banks are following the “Know You Client Policy (KYC)” imposed by the regulatory authorities in Hong Kong.

Simply put, the bankers must interview in-person with the business owners in Hong Kong and the banks need proof from applicants to obtain no-doubt answers the questions as follows:

1.    What is the nature of the business?

2.    Where are your suppliers from?

3.    Where are your customers from?

The reasons behind is the tightening regulatory on bankers against money-laundering. As a news roundup, HSBC is currently operating under the Deferred Prosecution Agreement with the US Treasury to raise their standard of administration against financial crimes in addition to FATCA requirement. Hong Kong, as an international financial hub, takes the US movement and thus tightly require the bank in Hong Kong to follow AML enact by HKMA.  Banks incline to reject unknown customers without track record.

Treat KYC as a production line in factory

As you may already know, the operation of banks is somehow similar to a highly modernized factory: Every department in the bank is highly specialized to focus on a few piece of processes. The function of a department is to follow the given instructions from above, process the thing input and pass the finished thing to the following stations.

You understand that the bankers who do the interviewing cannot ensure you that what their officers above will check for in your KYC.

So, are the bankers completely useless? The answer is a NO. Instead, bankers are your only access to successful account opening application, the only challenge is if you can find the right key.

Find a local expert in your journey

Bankers have duties to open bank accounts in order to stay on the bank’s payroll, they hope every client (local or expats) can open the bank account and bring more business to their bank under their management.  Bear these in mind:

1.    be smart, prepared before you get to the bank.

2.    think carefully before you talk to the bank officer.

3.    explain clearly and detailly.

4.    be polite, friendly and funny.

There are more than 150 banks operating in Hong Kong and different banks have their own taste of customer types. Even that a bank can change their taste anytime.

Why not let you bank account application be reviewed the local specialists who are closely in touch with business bank account opening services in those Hong Kong banks?

In the review, the local specialist can screen out the banks that is currently unflavored to you, and arrange the bank opening interview in the most favorable banks. What more, the specialist is experienced to help your preparation of right documents as proof, organization chart, business proposal, etc. and get ready for the questions you will face in the interview.

If you are not living in Hong Kong, it can maximize your efficiency by arranging bank account opening meeting one after one during your short stay in Hong Kong. Most importantly, you can omit a record of failed application in the bank that is expected to be very difficult to open bank accounts for your case.  A well-prepared application always means better chance.

Establish Corporate Residency

You can establish ‘corporate residency’ very easily by registering a new Hong Kong company and there are further steps that you can establish your local presence, i.e. residency in Hong Kong.

Tips for Bank Account Preparation

After your company is flashy incorporated, you should get ready of the following:

1.    A brief and pretty business plans: try to include a lot of charts and financial forecasts in addition to the bulky words.

2.    Clear business portfolio: a cozy corporate website, smart product brochure, and business name card are helpful.

3.    For those who have not found real customers yet, test-drive your business with your friends: If you are going to do trading business, use the name of your company to buy in a little stock from suppliers and “sell” to your friends (you can pass the money back to your friend in other way if your friend does not like the stuff.), then you should be given receipt bearing your company name from the suppliers and create invoice and delivery note to your friends. Although all the transaction is recorded in one of your personal account (probably), you have successfully created bank statement and financial record of your business.

Bear in mind, Hong Kong banks are some of the most liquid and well-capitalized in the world.

Whatsapp : (852) 6499 4686

Phone : (852) 2186 6936

Email : info@intershores.hk

Disclaimer:

Whilst reasonable care has been taken in provision of information above, it does not constitute legal or other professional advice. INTERSHORES does not accept any responsibility, legal or otherwise, for any error omission and accepts no responsibility for any financial or other loss or damage that may result from its use.  In particular, readers are advised to take appropriate professional advice before committing themselves to any involvement in jurisdictions, vehicles or practice.